Tuesday, July 21, 2015

GREECE: BETWEEN A ROCK AND A HARD PLACE

A former student of mine at Edinburgh Business School, where I taught the MBA Business Negotiation Elective from 1989-2005, has written (20 July) in The Times of Malta HERE:

“Its All Greek to Me”:

“In my student days I followed closely the writings of Gavin Kennedy, professor at Edinburgh Business Schools.

In his book, The New Negotiating Edge, he writes: “Many authors present negotiating as a choice of manipulative ‘tactics’ and aggressive ploys, delivered by the so-called ‘tough’ wise guys: the red style. In the real world negotiation is not so simple. No matter how ‘tough’ you try to be, waiting round the corner is a tougher guy.”

Comment

Here is a short piece I wrote coincidentally earlier today for my former company’s (Negotiate Ltd) Blog:

“The Greek Negotiations: Between a Rock and a Hard Place".

Does the dragging out of the negotiated conclusion, as typified by the long-saga of the Greek-EU negotiations, have interesting lessons for everyday business negotiations?

As with cease-fire and peace negotiations between countries at war, neither side aims to end-up as the loser. Hence, long-drawn out negotiations between warring parties tend to change track due to the each side’s changing fortunes on the battlefield. Sudden successes/reverses in their battlefield fortunes stiffen resistance or weaken their earlier demands, prolonging their negotiations.

Likewise, debtors have problems proportionate to their impossible or unfair creditor’s demands, but their creditor’s demands lose force if their debtors are so broke that they refuse to pay anything at all. Their creditors lose everything if their debtors walk away from their creditor’s demands and their debtors will walk if the pain of near bankruptcy is only marginally less worse that their total bankruptcy.

Negotiators realise these shifting, subjectively-judged boundaries to which they and their partners are bound, and which can be reflected in their mutually threatening rhetoric that might shift one side or the other to react negatively, even if mutually self-destructively, in the heat of a defiant moment.

The sudden resignation of Yani Varouakis, the Greek Finance Minister, signalled a shift in the deadlock in favour of the EU, and a pending Greek climb down to their resignation of accepting other terms they might otherwise have gotten if the prospect of a unilateral default to the mutual detriment of both parties had remained on the table.

During the negotiations each side had the comfort that the otherside will also be damaged by a default, but when default is immiment, each side is only concerned with the cost to themselves from their own electorate. The cost to the other side is of little comfort domestically.

Greece blinked first. Therefore, its pain continues for the foreseeable future. What its electorate will think of the severe consequences in a few months or years is unknown, as is the real cost of their blinking.”